It’s mid-December and that means it’s time for two things—effeminate claymation elves and the Nasdaq 100 (^NDX) rebalancing. For now, let’s focus on the latter.

This year, the gatekeepers of the Nasdaq 100 have decided to add 12 new stocks, while 12 current members have been voted off the island. The tribe has spoken. And in Wall Streetistan, this tribe speaks very loudly.

If you’re not familiar with the Nasdaq 100, it’s hard to overemphasize how important it is. To quote Reuters:

There are 22 U.S. mutual funds and nine international funds linked to the index, which also serves as a benchmark for some 400 related options, futures and other products.

The Nasdaq 100 index is vital to traders. It’s represented by the Mac Daddy of all ETFs, the QQQQ. The Nasdaq 100 is the 100 largest non-financial stocks on the Nasdaq. For many years, this effectively made the index a proxy for large-cap tech stocks. These were all the must-own stocks of the 1990s.

But many investors don’t realize that the index has changed a lot over the past few years. As the tech bubble burst, each December more techs stock have been yanked and replaced with non-tech names. For example, Bed, Bath & Beyond (BBBY) and Expeditors (EXPD) are now members.

It’s still a tech heavy index, but it’s nowhere near as techirific as it used to be. The daily changes of the Nasdaq 100 used to have a 97%-98% correlation with the daily changes of the S&P 500 Tech Index. That’s now down to 85% and by glancing at this year’s replacements, it’s going to go even lower.

Some of the new stocks are in the classic QQQQ mold—Google (GOOG) and Nvidia (NVDA). But there are also stocks like Urban Outfitters (URBN) and Patterson-UTI Energy (PTEN). These new guys are having a major impact. In fact, I think a better way to trade tech stocks now is not with the QQQQ but with the XLK—the S&P Tech Spyders. I should add that right now, neither of those indexes has the action of the S&P 500 Energy Spyders, the XLE.

Now if you'll excuse me, they're about to show the part with the Abominable Snowman.